Is it a good company at a reasonable price? I do like this company. However, if you invest in this stock, you must be fine with the volatility it will have in the stock price and therefore the value of your investment. See the paragraph below. Because this is a resource stock, I do not have much invested in it. The stock price would seem to be reasonable.
You can get an idea of this volatility by looking at the Beta for a stock. For example, this stock had a Beta recently of 2.02. A utility stock generally has a much lower. For example, Fortis had a Beta of 0.16. Note a Beta greater than 1.0 suggests that the stock is more volatile than the broader market, and a beta less than 1.0 indicates a stock with lower volatility.
I own this stock of Canadian Natural Resources (TSX-CNQ, NYSE-CNQ). I first bought CNQ in September 2012 because the dividend yield was relatively high. The 5 and 10 year median dividend yields were 0.73% and 0.75%. The current one was at 1.31% and I got it with a yield of 1.32%. In April 2013 I bought more shares of this stock because the yield is now at 1.54%.I bought another 100 shares in 2020 because the yield was 11.63%.
When I was updating my spreadsheet, I noticed I have had this stock for 11 years and I have made a total return of 14.88% per year with 11.89% from capital gains and 2.99% from dividends. I do not have much in this stock because it is a resource stock.
If you had invested in this company in December 2012, for $1,002.40 you would have bought 35 shares at $28.64 per share. In December 2022, after 10 years you would have received $521.94 in dividends. The stock would be worth $2,631.65. Your total return would have been $3,153.59.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $28.64 | $1,002.40 | 35 | 10 | $521.94 | $2,631.65 | $3,153.59 |
This stock has good growth in several important categories. See chart below.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 180.32% | 22.89% |
| 5 | AEPS Growth | 840.34% | 56.55% |
| 5 | Net Income Growth | 356.28% | 35.47% |
| 5 | Cash Flow Growth | 167.02% | 21.71% |
| 5 | Dividend Growth | 157.95% | 20.87% |
| 5 | Stock Price Growth | 67.39% | 10.85% |
| 10 | Revenue Growth | 205.84% | 11.83% |
| 10 | AEPS Growth | 661.22% | 22.50% |
| 10 | Net Income Growth | 478.07% | 19.18% |
| 10 | Cash Flow Growth | 212.30% | 12.06% |
| 10 | Dividend Growth | 600.62% | 21.49% |
| 10 | Stock Price Growth | 162.53% | 10.13% |
The current dividend yield is moderate with dividend growth good. The current dividend yield is moderate (2% to 4% ranges) at 4.44%. The 5 and 10 year median dividend yields are also moderate at 4.04% and 3.04%. The historical median dividend yield is low at 1.13%. The dividend growth is good (above 15% per year) with dividends growth at 21% per year over the past 5 years. Dividend growth has been good for most of the past 21 years of dividend payments.
As yields have gone up, so has the Dividend Payout Ratio. Dividend yields start at below 1% with a 7% payout ratio. Now the yields are in the 3% to 4% ranges and payout is around 30%.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2022 is 30% with 5 year coverage at 48%. DPR for Adjusted Earnings per Share (AEPS) for 2022 is 25% with 5 year coverage at 47%. The DPR for Adjusted Funds from Operations (AFFO) is 17% with 5 year coverage at 5%. The DPR for Cash Flow per Share (CFPS) for 2022 is 16% with 5 year coverage at 22%. The DPR for Free Cash Flow (FCF) for 2022 is 35% with 5 year coverage at 33%.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio is low and good at 0.13. The Liquidity Ratio is low at 0.82, but if you add in cash flow after dividends it is good at 2.70. The Debt Ratio is high and good at 2.01. The Leverage and Debt/Equity Ratios are good and low at 1.99 and 0.99.
The Total Return per year is shown below for years of 5 to 32 to the end of 2022. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2017 | 5 | 20.87% | 14.47% | 10.85% | 3.62% |
| 2012 | 10 | 21.49% | 13.08% | 10.13% | 2.95% |
| 2007 | 15 | 20.88% | 6.75% | 4.98% | 1.77% |
| 2002 | 20 | 21.33% | 16.10% | 13.62% | 2.49% |
| 1997 | 25 | 22.50% | 14.52% | 12.65% | 1.87% |
| 1992 | 30 | 13.96% | 12.46% | 1.50% | |
| 1990 | 32 | 22.55% | 20.00% | 2.55% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.54, 7.84 and 9.14. The corresponding 10 year ratios are 6.59. 7.90 and 9.22. The corresponding historical ratios are 10.26, 14.34 and 16.23. The current P/E Ratio is 11.88 based on a stock price of $80.99 and EPS estimate for 2023 of $6.82. This ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. (However, this is not a very high ratio for P/E Ratios.)
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 5.57, 6.67 and 8.55. The corresponding 10 year ratios are 9.33, 11.52 and 13.72. The current P/AEPS Ratio is 10.45 based on a AEPS estimate for 2023 of $7.75 and a stock price of $80.99. This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is more important than the P/E Ratio testing.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/Adjusted Funds from Operations Ratios are 3.50, 4.34 and 5.05. The corresponding 10 year ratios are 3.86, 5.02 and 6.11. The current P/AFFO Ratio is 5.76 based on a AFFO estimate for 2023 of $14.05 and stock price of $80.99. This ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $77.70. The 10-year low, median, and high median Price/Graham Price Ratios are 0.73, 0.91 and 1.06. The current P/GP Ratio is 1.11 based on a stock price of $80.99. This ratio is above the high ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 1.41. The current P/B Ratio is 2.34 based on a stock price of $80.99, Book Value of $37,175 and a Book Value per Share of $34.62. The current ratio is 66% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2023 of $36.50. This implies a P/B Ratio of 2.22 with a Book Value of $40,246M and a stock price of $80.99. This ratio is 57% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 5.05. The current P/CF Ratio is 5.70 based on Cash Flow per Share estimate for 2023 of $14.20, Cash Flow of $15,657M and a stock price of $80.99. The current ratio is 13% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 1.13. The current dividend yield is 4.44% based on dividends of $3.60 and a stock price of $80.99. The current dividend yield is 293% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 3.04. The current dividend yield is 4.44% based on dividends of $3.60 and a stock price of $80.99. The current dividend yield is 38% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 2.02. The current P/S Ratio is 2.40 based on Revenue estimate for 2023 of $35,915M, Revenue per Share of $33.72 and a stock price of $80.99. The current ratio is 19% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable. Both the dividend yield tests say that the stock price is cheap, but the P/S Ratio test says it is reasonable but above the median. The P/AEPS Ratio testing is important and says the stock price is reasonable and below the median. The P/CF Ratio test says it is reasonable, but above the median. Some of the tests are saying it is expensive.
When I look at analysts’ recommendations, I find Strong Buy (8), Buy (7) and Hold (7). The consensus would be a Buy. The 12 month stock price consensus is $91.62. This implies a total return of 17.57% with 13.13% from capital gains and 4.44% from dividends.
Analysts on Stock Chase seem to like this stock, but the last one says Hold because he says he is underweight in Oil and Gas stocks. Stock Chase gives this stock 5 stars out of 5. This stock is ranked 1 on the Money Sense List. Aditya Raghunath Motley Fool thinks this is an energy stock you can hold forever. Andrew Walker on Motley Fool thinks this stock is a safer bet than Suncor. The company put out a press release on Energy Now about their annual results for 2022.
Simply Wall Street reviews this stock via Yahoo Finance. Simply Wall Street gives this stock 3 stars out of 5. Simply Wall Street issued two warnings of earnings are forecast to decline by an average of 13.8% per year for the next 3 years; and significant insider selling over the past 3 months.
Canadian Natural Resources Ltd is an independent crude oil and natural gas exploration, development, and production company. The Company's exploration and production operations are focused in North America, largely in Western Canada; the United Kingdom (UK) portion of the North Sea, and Cote d'Ivoire and South Africa in Offshore Africa. Its web site is here Canadian Natural Resources.
The last stock I wrote about was about was Pembina Pipelines Corp (TSX-PPL, NYSE-PBA) ... learn more. The next stock I will write about will be Barclays PLC ADR (LSE-BARC, NYSE-BCS) ... learn more on Friday, April 28, 2023 around 5 pm. Tomorrow on my other blog I will write about Barrick Gold .... learn more on Thursday, April 27, 2023 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment